American and British diplomats met with “militias” to pave the way for permanent oil exports

The U.S. and U.K. are looking to revive Libya’s oil industry in a move to fund the country’s fight against Islamic State. Above, the Malta-flagged Seadelta oil tanker off the coast of Libya's eastern Ras Lanuf port on Sept. 19. PHOTO: GETTY IMAGES
The U.S. and U.K. are looking to revive Libya’s oil industry in a move to fund the country’s fight against Islamic State. Above, the Malta-flagged Seadelta oil tanker off the coast of Libya’s eastern Ras Lanuf port on Sept. 19. PHOTO: GETTY IMAGES

The latest ominous sign for global oil prices: Western officials are pushing for Libya to boost oil exports, part of an effort to help the country fund its fight against Islamic State.

In recent weeks, diplomats from the U.S. and U.K. have met with Libyan militia officials to urge them to restart crude shipments from long-closed ports, militia and Western officials said.

The meetings with a convalescing militia leader in Istanbul and his rivals in Tunis, Tunisia, seem to have paid off; Libya resumed shipments from a formerly blockaded port last week. Now, those shipments are roiling the world crude market, undermining the Organization of the Petroleum Exporting Countries’ attempt to curtail an oil glut.

Libya is a priority for American and British officials because its instability has allowed Islamic State, or ISIS, and human traffickers to gain a foothold there. Libya’s government needs money to combat them, and selling oil is the easiest way to get it.

“Western governments are pushing for a resumption of exports because they want to ensure Libya remains solvent, able to fight ISIS, and has the resources to conduct state building,” said Jason Pack of the security-focused consulting firm Libya-Analysis.

Libya is trying to triple oil output from last month’s 300,000 barrels a day; on Friday, it hit 410,000 barrels a day, the state-run oil company said.

The plan clashes with Libya’s counterparts in OPEC. They are meeting in Algeria on Wednesday to discuss limiting the heavy pumping that has oil supplies outstripping demand by an average of about 760,000 barrels a day this year, according to OPEC estimates.

Recent history shows the impact of a Libyan crude surge: The country’s last production increase, in 2014, helped spark the continuing price rout that saw oil fall by more than 50% and OPEC members’ budgets plummet.

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